Japan’s Seniors Open a Door for U.S. Firms : Fast-Growing Aged Sector Creating Demand for More Nursing and Retirement Facilities
The need for adequate housing for the elderly is increasing in Asia, where the senior citizen population is exploding and families aren’t as willing or as able as before to care for their aging relatives. But the market is difficult to crack, say U.S. nursing and retirement home operators and other experts.
“The Asian population is aging more rapidly that any population on earth . . . and there is certainly excess demand for nursing and retirement homes,” said Linda G. Martin, a professor of economics at the University of Hawaii and a population researcher at the East-West Center in Honolulu.
“Many elderly Asians are revising their expectations of receiving care from their adult offspring” because of urbanization and other social changes, Martin added. “The question is, what are Americans going to offer that these (Asian) countries can’t do themselves?”
Although the largest elderly Asian populations are in China--with 47 million people aged 65 or older--and India--with 28 million--most U.S. nursing and retirement home operators have turned their focus to Japan, whose booming economy and fast-growing senior citizen population have sent U.S. companies scrambling to sign joint-venture agreements with Japanese firms.
In January, Brim & Associates, a Portland, Ore., hospital consulting firm, said it is holding discussions with C. Itoh Co.--Japan’s largest trading company--and a Japanese banking and insurance concern, to develop two retirement facilities near Osaka. That came after Pasadena-based Beverly Enterprises agreed to spend $500,000 and joined with Shimizu Construction Co. in 1985 to build retirement housing in Japan. ARA Holding Co., the Philadelphia-based concern that operates a vending machine and nursing home subsidiary, has been active in the Japanese market as well, said spokesman Harry R. Belinger.
Harder to Get By
The medical and housing needs of the elderly in Japan have attracted increasing attention in recent years from government and private industry officials. In 1986, for example, Tokyo’s powerful Ministry of Trade and Industry began publicizing a plan to encourage the nation’s senior citizens, who receive an average lump-sum retirement allotment of about $130,000, to retire overseas. And a growing number of American health-care companies have attended annual health-care trade fairs in Japan in an effort to capitalize on the market for services for the elderly.
“There will be a lot more old people in this aging society, and it’s getting harder all the time for Japan’s old people to get by on their retirement pay,” MITI spokesman Takao Itoh remarked when his agency disclosed the overseas retirement plan. “With the buying power of the yen what it is, why shouldn’t our old people take advantage of it by living overseas?”
Currently, about 15% of Japan’s 120 million people are 65 years or older, compared to 12.1% in the United States, according to the Senate Special Committee on Aging. However, greater longevity among the Japanese is expected to increase the 65-and-older population to 23.3% by the year 2000, compared to 13.1% in the United States.
Brim & Associates said it hopes to conclude negotiations of a $60-million retirement center and a 100-bed skilled nursing facility near Osaka by next month.
“There are some very basic changes in the Japanese culture today which make this the right time for this project,” said Gene Brim, president of the management firm. “The severe limitations on land for housing because of high real estate costs and the growing desire of older and younger generations to live separately have spawned great interest in retirement housing options.”
Respect for the Elderly
Yet however attractive a graying Japan may appear to U.S. entrepreneurs, the market presents daunting economic and cultural challenges, experts say.
There is still a strong cultural embrace of filial piety and respect and reverence for the elderly, Martin said.
It is also much more expensive to operate a retirement home in Japan than in the United States, experts say.
Everything from serving and presenting food on expensive china and lacquer tableware to providing elaborate communal bathing facilities eats into profit margins. And Japanese senior citizens also want some of the entertainment diversions of their American counterparts such as billiards and golf.
“I think Americans underestimate how long it will take for cultural resistance to change,” said Sanford R. Goodkin, a San Diego-based international real estate analyst for Peat Marwick Main & Co. “The Japanese just have a different perception from us on some things.”
Indeed, few of the U.S. companies that have signed agreements with Japanese firms have even broken ground on retirement housing.
Since announcing its agreement four years ago, Beverly has opened just one Japanese facility--a 54-room unit in Chigasaki. Yet the company, which has been contacted by a host of other Asian countries interested in retirement homes, including China, South Korea, Singapore, Taiwan and Hong Kong--remains cool to retirement home projects outside Japan.
“Our feeling right now is the Japanese market is the most significant because of the fact that its population is an aging population and . . . in terms of the development of their economy, it is up there with the United States and all other developed countries,” said Jack MacDonald, a vice president at Beverly Enterprises.
